As part of its Healthy Environment and Healthy Economy (HEHE) plan to address climate change, the Canadian government intends to increase the carbon tax from its current level of $30 per tonne to $170 per tonne over the next nine years. To respond to this plan positively, oil companies have started to address the most significant issue on carbon emissions from their current oil recovery processes, such as steam assisted gravity drainage (SAGD), by utilizing more environmentally responsive processes. Vapor extraction (VAPEX) was proposed as an alternative method; however, its previous studies were limited to a conventional solvent (n-alkane), which is not economically feasible. Dimethyl ether (DME), an emerging renewable chemical resource, was initially proposed as a solution to reduce carbon emissions and aroused interest in the heavy oil industry. But limited research has been carried out for understanding and evaluating DME’s performance in heavy oil recovery.In this study, essential mechanisms including asphaltene deposition, reservoir responses due to solvent injection or solid adsorption, and mass transfer by considering water phase solubility during DME injection have been studied by numerical simulation. Moreover, production performance, in-situ upgraded oil and energy efficiency have been compared among SAGD, conventional propane VAPEX and DME as a novel solvent for warm VAPEX. DME has been evaluated as a promising solvent for heavy oil and bitumen recovery with a less negative blockage effect, a higher recovery factor and rate, higher API upgrading, and higher energy efficiency compared with a conventional solvent. DME, as a renewable, amphoteric chemical solvent, will lead to significant implications in addressing the challenges brought by carbon emissions.